Just over a week ago shares of Unilife Corporation (NASDAQ: UNIS) sank to a 52-week low of 1.80 and the future of the developer and supplier of injectable drug delivery systems was less than certain but the company has seen a dramatic turnaround on Friday with shares climbing to a six-month high of 3.20 and their trading volume passing the 7.5 million mark by mid-afternoon.
The catalyst for Friday’s surge was yesterday’s release of UNIS’s financial results for the third quarter ended March 31, 2013. While the actual financial results may not have been the trigger for today’s activity the words of CEO, Alan D. Shortall, during the company’s conference call discussing the results certainly have played a significant role in today’s developments.
Shortall’s opening comment sin that conference call noted “Before we discuss the quarter, I’m excited to tell you that we are getting ready to announce our first major long-term supply contract for the Unifill syringe. This is a significant multiyear commercial supply contract with a major pharmaceutical customer that generates revenue immediately. The negotiations for this agreement are complete, all terms have been agreed upon. The execution copy is being routed for signature by both parties. This agreement will establish Unilife as one of the leading suppliers of prefilled syringes in our industry. It also reaffirms all aspects of our business model. We are scheduling a press conference in New York City to make the formal announcement in the next couple of weeks. This is the first in a series of significant revenue-generating contracts that are ready to emerge from our commercial pipeline. Revenue associated with these agreements will be recognized from the July quarter onwards.”
In UNIS’s press release dated yesterday this long-term supply contract was recognized as one of the highlights during the quarter as they stated “In April, Unilife signed a 15-year customization and commercial supply contract with a U.S. pharmaceutical company for the EZMix™ dual-chamber syringe. This contract is expected to generate up to $110 million in cumulative revenue from customization programs, production scale-up, device sales and a royalty from net drug sales.”
For Shortall the recent developments for UNIS serve as validation, stating “Having long said that 2013 would be the inflection point for our business, I am pleased to have turned the corner. We are now entering a period of hyper-growth, and expect to generate accelerating, recurring revenue from an expanding base of customers.”
This “hyper-growth” and expectation of generating accelerating, recurring revenue also led Shortall to declare the company had “no intention of doing any secondary stock offering that would cause significant dilution to existing shareholders.”
Recognizing that the prospects for future financial growth appear strong investors quickly pushed the company’s share price north on Friday and thus far they have managed to keep that elevated share price throughout the trading session.
UNIS is now comfortably ahead of their 50-day moving average of 2.18 as well as their 200-day moving average of 2.54 and by all indications they shouldn’t be seeing those levels again any time soon.